Now, a group of Latin American countries is looking to form a regional alternative in the form of Banco del Sur (Bank of the South), a Chavez-conceived development bank that would be run by Latin Americans for Latin America.

The moves against the IMF and World Bank represent a popular rejection of the "Washington consensus" that rich-country aid should be tied to forced privatization programs, which have failed to make much of a dent in poverty rates.

Leftist presidential candidates have tapped into this sentiment to win recent elections and are increasingly looking for ways that Latin America can solve its own problems. And as the region readies itself for further financial and political integration – made possible by a healthy world economy plump on high commodity prices and Chávez's oil largesse – analysts say the World Bank and IMF are seeing the need to adapt.

"Banco del Sur is the answer to the deterioration of the IMF and World Bank," says Luis Maldonado Lince, a presidential representative to Ecuador's junta bancaria, a government body that helps regulate the country's banking sector. "Latin America has been impoverished and harassed long enough that we have no other choice [but to] start Banco del Sur."

The bank's founding members would include Venezuela, Ecuador, Argentina, Brazil, Bolivia, and Paraguay. Uruguay said last month that it would join as well. It's still unclear exactly how the bank, expected to begin operations in 2008, would function – how economies would be converged, and whether political integration would follow. But whatever the form, left-leaning analysts say Banco del Sur will be a vast improvement to the Western-dominated financial institutions, which they say have lost credibility in the region.

Mark Weisbrot, codirector of the Center for Economic and Policy Research in Washington, says the move to create Banco del Sur is one of many signs of a new independence from international institutions such as the IMF, whose influence first began to wane a decade ago with the Asian financial crisis in the late 1990s when the IMF imposed strict, unwanted austerity measures.

At the beginning of this decade, skepticism in Latin America was sealed when Argentina disregarded IMF advice by defaulting on its debt and then experienced robust economic recovery. "[Latin American countries] don't have to care anymore what the US thinks, and that is mainly because of the collapse of IMF influence," Mr. Weisbrot says.

Viable lender or political tool?

Still, many critics doubt Banco del Sur will alone be able to replace the international financial institutions, and see it as a vehicle for Chávez and like-minded leaders to expand their political clout. "[Banco del Sur] is another example of visceral thinking," says Ecuador-based financial analyst Ramiro Crespo of Analytica Securities. "I doubt it will be more qualified than the World Bank."

But many Latin American nations are nevertheless turning to private capital or other institutions such as the Andean Development Corporation (CAF) to secure loans for development projects, because the economy is flush with money and the loans are easier to access.

IMF's commitment in the region, for example, has fallen to less than $3 billion from $50 billion five years ago.

Anoop Singh, Latin America's top IMF official, says the changing relationship shows that the region has internalized the message of macroeconomic stability. "This period when the Fund is not lending anywhere near what it did five years ago is actually a good development," he says.

IMF looks to adjust its approach

In fact, say observers, the new competition may help the global institutions sharpen their missions.

"I'm not concerned about countries in Latin America running away from the [IMF]," says Liliana Rojas-Suarez, a former IMF official who is now a senior fellow at Washington's Center for Global Development. "I'm more concerned about what the IMF exactly should be doing, and where it should be focusing.... It's only now starting to recognize a number of policies that could be different."

"There is the perception that the IMF has one recipe for everybody." she adds. "They are trying to improve that."

Another example of change, Singh says, could be working with countries to redefine how energy subsidies are distributed, so more money goes to the poor. "We do believe that there is room in the region for macroeconomic policies to be reoriented toward poverty reduction," he says.

On July 1 the Inter-American Development Bank put into operation a new mandate to help countries gain greater access to alternative sources of financing, to respond to the particular needs of each country, and to reduce the vulnerabilities of the region to sudden changes in the world economy.

It is this type of competition from other development banks that could ultimately serve the entire region, even as it has put the World Bank on edge.

"The World Bank never thought of what would happen if countries didn't really need the money; they didn't plan any exit strategy," says the consultant, who was not authorized by the World Bank to speak on the record. "[They] have to compete right now, because countries don't need the money."

"Like Chávez's other regional initiatives, this one too depends a lot on the extent to which the oil bonanza continues," says Michael Shifter, vice president of the InterAmerican Dialogue, a Washington think tank. "It is doubtful that Chavez's grandiose vision on this idea will be fully realized."